Chart Check: 30% since February! Should you buy, sell or hold Sonata Software?

Sonata Software, part of the IT sector, has rallied by over 30% since February 2023, and the momentum helped the stock to break out from a rounding bottom pattern on the weekly charts.

Short-term traders can use dips to buy the stock as there is potential for further upside towards 900 in the next few months; however, marginal profit booking could be expected as it is trading near overbought levels.

The stock rose from Rs 607 recorded on 31 January 2023 to Rs 823 as on 6 March 2023 which translates into an upside of 36%.


After the breakout from a rounding bottom pattern on 27 February 2023, the momentum took the stock to a fresh record high of Rs 832 on 6 March 2023.

The neckline of the rounding bottom pattern was placed at Rs 770. The stock closed at Rs 794 on 27 February 2023, data showed.

In terms of price action, Sonata Software stock is trading above short and long-term moving averages such as 5,10,30,50,100 and 200-DMA on the daily charts which is a positive sign for the bulls.

The Relative Strength Index (RSI) is at 77.3. RSI above 70 is considered overbought. This implies that the stock may show a pullback. MACD is above its center and signal Line, this is a bullish indicator, Trendlyne data showed.

Sonata Software stock has experienced a rebound from its 38.2% Fibonacci retracement level, which marks a significant upward movement from level Rs 110 in March 2020 to Rs 768 in October 2021. This retracement level served as a solid base for the stock to stabilize at, suggest experts.

“The Sonata Software stock has demonstrated a significant technical development on its weekly timeframe, as it has successfully broken out of a Rounding Bottom pattern, indicating continuation of the prior uptrend,” Omkar Patil, Technical Research Associate at GEPL Capital, said.

“On the daily timeframe, the stock has been persistently trading near the upper Bollinger Band, indicating an increase in volatility for a potential upward movement,” he said.

“The RSI on the Weekly timeframe has given a breakout too which shows the strong bullish momentum,” highlighted Patil.

“Based on these technical indicators, it is expected that the stock's prices will continue to rise towards the level of Rs 900, with a recommended stop loss at Rs 740 on a closing basis,” he recommends.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)